Study Guide
Latin America Government and
Economics
1-3. Define the ways government
systems distribute power: Unitary,
Confederation, Federal
1. Unitary–
Power is held by one central authority.
2. Confederation
–
–
–
Independent states/countries band together for
some common purpose.
They only delegate a few powers to the central
authority. By which they are giving up certain
freedoms.
States/countries retain considerable independence.
3. Federal
–
Power is divided between one central and several
regional authorities.
4-6. Define the ways governments
determine citizen participation:
autocratic, oligarchic, and democratic
4. Autocratic•
•
One person possesses unlimited power.
The citizen has limited, if any, role in government.
5. Oligarchic•
•
•
Government by the few.
Sometimes a small group exercises control,
especially for corrupt and selfish purposes.
The citizen has a very limited role.
6. Democratic•
All citizens participate in the government
7. Describe the difference between
parliamentary and presidential
democracy
• Parliamentary
– Citizens elect members of parliament
– Those members choose a leader from among
themselves to be the Prime Minister (PM)
– May have a monarch as the head of state
• Presidential
– Citizens SEPARATELY elect the members of the
legislature and the President (chief executive)
– Most South American countries have this form of
democracy
8. What are the types of government and
economic systems of Brazil, Mexico,
Cuba?
• Brazil- presidential democracy; mixed economy
(closer to market)
• Mexico- presidential democracy; mixed
economy (closer to market)
• Cuba- communist dictatorship; mixed economy
(closer to command)
9. What are the 3 basic questions that
all economic systems have to answer?
• What goods and services will be
produced?
• How will the goods and services be
produced?
• Who will get the goods and services?
10-12. Describe the following economic
systems: traditional, market, command,
mixed
10. Traditional– the customs and habits of the past make
decisions
11. Market– decisions are made by individuals
12. Command– decisions are made by the government
13. What type of economic system do
most Latin American countries have?
• Most Latin American countries have a
mixed economy, closer to the market side
14. Where are Brazil, Cuba, and Mexico
located on the economic continuum?
Cuba
Brazil
30%
57%
Pure
Command
Mexico
66%
Pure
Market
15-17. Define GDP (Gross Domestic
Product), human capital, and capital
goods
15. GDP-
– the total value of all the goods and services
produced in a country in one year
16. Human capital– human workers
17. Education and healthcare
18-19. Define Capital goods and
entrepreneurship
18. Any tool that a worker uses to make
another good. Examples: machines in
factories, computers
19. People who are willing to take risks in
business
20. Describe the role of natural
resources in a country’s economy
•
•
Typically, if a country has natural
resources, then the economy will do well.
The country saves money because it
does not have to import natural
resources needed by the people
21. Explain how specialization
encourages trade between countries
• If one country specializes in one item, then
they can become masters at producing
that item.
• Then, they can trade that really good item.
• Other countries then specialize in other
items and trade those.
• Then the countries can trade and end up
with good quality items after trading.
22-24. Define the following trade
barriers: tariff, embargo, quota
22. Tariff- tax on imports
23. Embargo- a government order stopping
trade with another country
24. Quota- limit on the amount of goods let
into a country
25. What is currency exchange rate?
• The price of one’s nation’s currency in
terms of another nation’s currency
• Examples:
– $1=€1.37
– 1 Mexican peso=$0.079
– 1 Brazilian real= $0.567
26. What is the main purpose of
NAFTA?
•
Increase trade by creating a large freetrade zone
27. How does Latin America’s literacy
rate effect its development?
• The higher the literacy rate the better the
standard of living
• Latin America tends to have several
countries with low literacy rates